I recent­ly watched the fed­er­al trea­sur­er, Scott Mor­ri­son, proud­ly pro­claim that Aus­tralia was in “sur­pris­ing­ly good shape”. Indeed, Aus­tralia has just snatched the world record from the Nether­lands, achiev­ing its 104th quar­ter of growth with­out a reces­sion, mak­ing this achieve­ment the longest streak for any OECD coun­try since 1970.

Aus­tralian GDP growth has been trend­ing down for over forty years
Source: Trad­ing Eco­nom­ics, ABS

I was pret­ty shocked at the com­pla­cen­cy, because after twen­ty six years of eco­nom­ic expan­sion, the coun­try has very lit­tle to show for it.

Chi­nese con­struc­tion keeps trend­ing down with Sany the worlds sixth largest heavy machin­ery mak­er report­ing a rise in prof­it of 5.4% in the same quar­ter as a blow out in receiv­ables of USD $1.39 bil­lion and cash reserves falling by USD $535 mil­lion . Sany is clear­ly book­ing prof­its on 100% financed machin­ery while pro­vid­ing zero trans­paren­cy on cred­it risk and delin­quen­cy . If the GFC has taught the world any­thing. then 100% ‘no mon­ey down” ven­dor finance should ring alarm bells. This all start­ed about about 3 months ago when Zoom­lion start­ed to aggres­sive­ly financ­ing heavy machin­ery for any­one that want­ed to sign up

The Fall of the Com­mu­nist Dynasty and The Loot­ing of Chi­na touched on the wide­spread fraud that has become appar­ent, both in main­land and US list­ed Chi­nese com­pa­nies. I also showed that an extra­or­di­nary num­ber of the Com­mu­nist Par­ty and the mil­i­tary cadre had mas­sive unex­plained wealth, with the Top 70 record­ing a net col­lec­tive worth of over $80 bil­lion. This week Bloomberg was banned by the Chi­nese gov­ern­ment for report­ing the incom­ing pres­i­dents fam­i­lies assets at over $367M.

As Xi climbed the Com­mu­nist Par­ty ranks, his extend­ed fam­i­ly expand­ed their busi­ness inter­ests to include min­er­als, real estate and mobile-phone equip­ment, accord­ing to pub­lic doc­u­ments com­piled by Bloomberg.

‘Ever­grande who ranks among the top 5 Chi­nese prop­er­ty com­pa­nies. Our analy­sis and pri­ma­ry research reveal that: 1] Ever­grande is insol­vent; and 2] Ever­grande will be severe­ly chal­lenged from a liq­uid­i­ty per­spec­tive. The Company’s man­age­ment has applied at least 6 account­ing shenani­gans to mask Evergrande’s insol­ven­cy. Our research indi­cates that a total write-­down of RMB 71bn is required and Evergrande’s pro for­ma equi­ty is neg­a­tive 36bn.’

“A series of major rup­tures in cap­i­tal­ist economies were observed and not­ed by those in posi­tions of eco­nom­ic and polit­i­cal lead­er­ship in West­ern soci­eties,” he said. “These rup­tures caused con­sid­er­able anx­i­ety among these lead­ers, but rather than heed­ing the lessons, they respond­ed by man­ic, omnipo­tent and tri­umphant attempts to prove the supe­ri­or­i­ty of their economies.”

John Hemp­ton from Bronte Cap­i­tal expands on the theme of sys­temic chal­lenges cur­rent­ly fac­ing the Chi­nese econ­o­my that we touched on last week with The End of the Com­mu­nist Dynasty

The Macro­eco­nom­ics of Chi­nese klep­toc­ra­cy Chi­na is a klep­toc­ra­cy of a scale nev­er seen before in human his­to­ry. This post aims to explain how this wave of theft is financed, what makes it sus­tain­able and what will make it fail. There are sev­er­al Chi­na experts I have chat­ted with – and many of the ideas are not orig­i­nal. The syn­the­sis how­ev­er is mine. Some sources do not want to be quot­ed.

First and fore­most, the IMF has down­grad­ed GDP fore­casts, ‘warn­ing of a new glob­al reces­sion that would hit com­mod­i­ty prices and dri­ve mil­lions world­wide into unem­ploy­ment.’ Now sug­gest­ing growth to be “anaemic” in advance economies (1.6%). ‘How­ev­er, this assumes Euro­pean pol­i­cy­mak­ers con­tain the cri­sis in the euro area periph­ery, that US pol­i­cy­mak­ers strike a judi­cious bal­ance between sup­port for the econ­o­my and medi­um-term fis­cal con­sol­i­da­tion, and that volatil­i­ty in glob­al finan­cial mar­kets does not esca­late’ the fund said.

Video overview

Debunking Economics II

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